Pakistan’s total debt and liabilities have surpassed Rs50.5 trillion making a new record owing to the addition of Rs20.7 trillion under the current government alone.
The State Bank of Pakistan (SBP) on Wednesday released the debt figures till September 2021. A day before Prime Minister Imran Khan described the rising debt as a “national security issue”.
According to the official figures, the total debt and public debt situation worsened during the tenure of the current Pakistan Tehreek-e-Insaf (PTI) government.
Pakistan’s total debt and liabilities soared to a record Rs50.5 trillion towards the end of September 2021, increasing by Rs20.7 trillion in the past 39 months. There was a surge of around 70% in the total debt of the country.
In June 2018, every Pakistani owed Rs144,000, which has now increased to Rs235,000 by September 2021, an additional burden of Rs91,000 or 63% during PTI’s tenure.
Similar to its predecessor, the PTI government is relying on foreign and domestic loans and has been unable to enhance revenues to levels where its debt burden can be lowered.
The situation is similar in terms of public debt, which is a direct responsibility of the federal government.
The government has increased the public debt by Rs16.5 trillion during its tenure, which equates to 165% of the debt that was acquired by the government of Pakistan Muslim League-Nawaz (PML-N) in five years.
The public debt rose to Rs41.5 trillion by September this year, due to an additional Rs16.5 trillion acquired during PTI’s tenure. Total public debt climbed by 66% between July 2018 and September 2021, according to the official bulletin.
The addition of Rs16.5 trillion to the public debt within the last 39 months is equal to the amount added in 10 years by the last two governments of the Pakistan Peoples Party (2008-2013) and PML-N (2013-2018).
According to the central bank, taking into account the addition from the fiscal year 2018-19 to September 2021, the total public debt as of June 30, 2021, has risen to Rs41.5 trillion, or 77% of GDP.
The PTI government is responsible for the addition of, on average, Rs14 billion a day to the public debt, which is more than double the daily average addition of Rs5.8 billion by the PML-N government.
Towards the completion of the PML-N government’s tenure, the total public debt was at Rs24.95 trillion, or 72.5% of GDP.
In February 2019, PM Imran Khan had sworn to bring the public debt down to Rs20 trillion. He had been extremely critical of the economic policies exercised by the preceding PPP and PML-N governments and had set up the Debt Inquiry Commission to investigate the reasons behind the addition of Rs18 trillion to the debt stock in those 10 years. Although the inquiry has ended, PM Khan has not disclosed the report.
The gap between expenditures and revenues directly leads to the accumulation of debt. The gap has been widening owing to the inelasticity of debt servicing and defense requirements as well as the failure of the Federal Board of Revenue (FBR) to improve tax collection significantly.
Under the IMF’s loan condition, the government will slash the contingency grants budget by Rs50 billion, and the Public Sector Development Programme will see a cut of Rs200 billion, which will inevitably slow down the economic development.
